The Supreme Court of the United States has ruled that pharmaceutical sales representatives ("PSRs") are "outside salesmen" who are not entitled to overtime under the Fair Labor Standards Act ("FLSA"). The high court's ruling was predicated on its finding that, in the pharmaceutical industry's "unique regulatory environment," the commitments obtained by PSRs equate to traditional sales. Furthermore, the Supreme Court rebuked the U.S. Department of Labor ("DOL") for "unfairly surprising" the industry by filing amicus briefs arguing that PSRs were not exempt from the FLSA's overtime requirements.

PSRs provide physicians with information about the efficacy and benefits of their company's products but cannot "close" sales. Rather, within the regulatory scheme governing pharmaceuticals, PSRs attempt to convince doctors to make nonbinding promises to prescribe their products. For that reason, the DOL (along with plaintiffs and some federal courts) has contended that PSRs do not make "sales" and thus are not covered by the "outside sales" exemption.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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